Lewis, et al v. Russell, et al

Filing 554

MEMORANDUM, OPINION and ORDER signed by Senior Judge William B. Shubb on 10/16/19 GRANTING 551 Joint Motion for Good Faith Settlement; ORDERING that the settlement agreement reached by the settling parties is in good faith and is a fair, adequ ate, and reasonable settlement; DISMISSING all pending claims and cross-claims against the settling parties with prejudice; ORDERING that the Covenant constitutes an administrative settlement with the State for purposes of CERCLA §9613(f)(2); and BARRING any and all claims or future claims for contribution or indemnity, arising out of the facts alleged in the Second Amended Complaint, and as further identified and provided for in the settlement regardless of when such claims were asserted or by whom. (Coll, A)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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----oo0oo----

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CHARLES H. LEWIS and JANE W.
LEWIS,

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No. 2:03-cv-02646 WBS AC

Plaintiffs,
MEMORANDUM & ORDER RE: JOINT
MOTION FOR GOOD FAITH
SETTLEMENT

v.
ROBERT D. RUSSELL; IRENE
RUSSELL; BEN J. NEWITT; the
Estate of PHILLIP NEWITT,
Deceased; JUNG HANG SUH; SOO
JUNG SUH; JUNG K. SEO; THE DAVIS
CENTER, LLC; MELVIN R. STOVER,
individually and as trustee of
the Stover Family Trust; STOVER
FAMILY TRUST; RICHARD ALBERT
STINCHFIELD, individually and as
successor trustee of the Robert
S. Stinchfield Separate Property
Revocable Trust; ROBERT S.
STINCHFIELD SEPARATE PROPERTY
REVOCABLE TRUST; THE BARBARA
ELLEN STINCHFIELD TESTAMENTARY
TRUST; WORKROOM SUPPLY, INC., a
California corporation; SAFETYKLEEN CORPORATION, a California
corporation; the CITY OF DAVIS;
JENSEN MANUFACTURING COMPANY;
VIC MANUFACTURING COMPANY;
MARTIN FRANCHISES INC., aka/dba
MARTINIZING DRY CLEANING,
Defendants.

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Plaintiffs Charles and Jane Lewis brought this action
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under, inter alia, the Comprehensive Environmental Response,

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Compensation, and Liability Act (“CERLCA”), 42 U.S.C. § 9601 et

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seq. against the above captioned defendants in 2003.

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Amended Compl. (“SAC”) (Docket No. 197).)

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joint motion for Good Faith Settlement and Order Dismissing and

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Barring Claims.

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I.

Before the court is a

(Docket No. 551.)

Background

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(See Second

Defendant Robert D. Russell operated a dry cleaning
business at 670 G Street, in Davis, California (“the Site”) from

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1964 to 1971.

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Newitt (“Newitts”) took over the business and leased the dry

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cleaning operation to Charles and Jane Lewis in 1975.

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33-34.)

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operated it until August 1996.

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leased the dry cleaning business to defendants Jung Hang Suh, Soo

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Jung Suh, and Jung K. Seo (“Suhs”) from August 1996 to May 2005.2

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(Id. ¶ 36.)

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(Id. ¶ 29.)

In 1971, defendants Ben and Phillip

(Id. ¶¶

The Lewises1 then purchased the business in 1977 and
(Id. ¶ 34.)

The Lewises later

In February 1999, the California Regional Water Quality
Control Board, Central Valley Region (“Control Board”) advised

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Charles and Jane Lewis have passed since bringing this
action. References to the “Lewises” now includes the estate of
Charles H. Lewis and Robert Zehnder as the personal
representative of Charles Lewis.
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The Suhs are not parties to the settlement. The Suhs
have not participated in the litigation since filing their crossclaims in 2004. (Decl. of Jennifer Hartman King (“King Decl.”) ¶
6 (Docket No. 551-1).) The Settling Parties’ claims against the
Suhs were discharged in 2010 after the Suhs filed bankruptcy.
(Id. ¶ 8.) The City of Davis obtained summary judgment on the
cross-claims the Suhs asserted against the city in February 2018.
(Id. ¶ 7.)
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the Lewises that the chemical tetrachloroethene, also known as

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perchlorate (“PCE”), had been discovered in the soil and

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groundwater at and around the Site.

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contend that Russell, the Newitts, and the Suhs permitted the

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sudden and accidental releases of PCE onto the Site and adjacent

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properties while they were operating the dry cleaning business.

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(Id. ¶ 43.)

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(“City”) caused or contributed to the release of PCE.

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44.)

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(Id. ¶ 29, 40.)

The Lewises

Additionally, the Lewises allege the City of Davis
(Id. ¶ 43-

In October 2002, the Control Board issued a Cleanup and

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Abatement Order No. R5-2002-0721 (the “Order”) commanding the

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current and former owners and operators of the Site to

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investigate the extent of the contamination and prepare a plan to

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remedy it.

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the captioned defendants failed to participate in the

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decontamination efforts.

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brought this action seeking to recover costs and contribution

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under CERCLA; statutory contribution and indemnity pursuant to

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Carpenter-Presley-Tanner Hazardous Substance Account Act,

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California Health and Safety Code § 25363(e); breach of contract;

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equitable indemnity and contribution; negligence; and declaratory

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relief.

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(Id. ¶ 42.)

Despite the Order, the Lewises alleged

(Id. ¶ 45.)

Consequently, the Lewises

(See SAC at 21-23.)
After years of investigation, the Control Board

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approved a Data Gap Investigation Report and Source Area

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Remediation Plan (“Remediation Plan”) in 2015.

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Jennifer Hartman King (“King Decl.”) ¶ 25-26 (Docket No. 551-1).)

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(Decl. of

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On March 15, 2019, the “Settling Parties”3 agreed, without

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admitting liability or wrongdoing, to mutually release, with

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prejudice, existing and future claims against each other related

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to the existing contamination at the Site.

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exchange for this mutual release, the Settling Parties agreed to

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fund The Davis Center Remediation Project Trust (“Trust”) to

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cover the costs of the Site’s decontamination.

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Agreement and Mutual Release (“Settlement Agreement”) at 3

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(Docket No. 551-2).)

(Id. at ¶ 15.)

In

(Settlement

The Lewises, The Davis Center, and Potter-

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Taylor have collectively agreed to pay a total of $1,740,000.00.

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(Id.)

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Decl. ¶ 34.)

The City will not contribute funds to the Trust.

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(King

The settling parties also entered into an Agreement and

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Covenant Not to Sue (“Covenant”) with the Control Board to

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memorialize the agency’s approval of the decontamination plan,

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document the mutual release of claims, and serve as an

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administrative settlement under § 9613(f)(2) of CERCLA.

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Decl. ¶¶ 37-38.)

(King

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The Settlement and Covenant are contingent upon this

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court finding the terms of the Settlement were reached in good

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faith.

Consequently, the Settling Parties now jointly seek a

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These parties include the City; the “Landowners,”
specifically The Davis Center, LLC, Emily A. Stover, individually
and as Trustee of the Stover Family Trust and as Personal
Representative for Melvin Stover (Deceased), and Richard Albert
Stinchfield, individually and as Trustee of the Robert S.
Stinchfield Separate Real Property Trust and as Trustee of the
Barbara Ellen Stinchfield Testamentary Trust; the “Potter Taylor”
entities, including Potter Taylor & Co., Potter, Long, Adams &
Taylor Ltd., Potter-Taylor, Inc., Potter Taylor & Scurfield,
Inc.; and the Lewises. (King Decl. ¶ 15.)
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determination that the settlement was reached in good faith and

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an order dismissing all claims against them, and barring all

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future contribution and indemnity claims, with prejudice.

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Mot. for Good Faith Settlement at 3 (Docket No. 551).)

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II.

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Discussion
A.

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(Joint

Applicable Law
The settling parties have settled claims brought under

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both state and federal law.

Accordingly, the court must evaluate

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the “good faith” of each settlement pursuant to its applicable

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law.

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632 F.3d 1056, 1060 (9th Cir. 2011) (citation omitted) (“When a

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district court . . . hears state law claims based on supplemental

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jurisdiction, the court applies state substantive law to the

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state law claims.”).

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See Mason & Dixon Intermodal, Inc. v. Lapmaster Int’l LLC,

Under federal law, one of CERCLA’s “core principles” is

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to “foster settlement through its system of incentives and

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without unnecessarily further complicating already complicated

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litigation.”

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F.3d 474, 486 (9th Cir. 2015) (quoting Chubb Custom Ins. Co. v.

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Space Sys./Loral, Inc., 710 F.3d 946, 971 (9th Cir. 2013)).

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District courts retain discretion to determine the most equitable

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method of accounting for settlements in private-party

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contribution actions.

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9613(f)(1)).

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agreement is roughly correlated with some acceptable measure of

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comparative fault that apportions liability among the settling

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parties according to a rational estimate of the harm the

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potentially responsible parties have done.

AmeriPride Servs. v. Tex. E. Overseas, Inc., 782

Id. at 487 (citing 42 U.S.C. §

Ultimately, the court is must find that the

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Arizona v. City of

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Tucson, 761 F.3d 1005, 1012 (9th Cir. 2014) (citations and

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internal quotation marks omitted).

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“model acts” like the Uniform Comparative Fault Act (“UCFA”) and

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the Uniform Contribution Among Tortfeasors Act (“UCATA”), they

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are under no obligation to do so.4

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at 486.

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While the courts may consult

AmeriPride Servs., 782 F.3d

An order barring claims is “appropriate to facilitate

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settlement, particularly in a CERCLA case.”

Tyco Thermal

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Controls LLC v. Redwood Indus., No. C06-07164 JF (PVT), 2010 WL

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3211926, at *5 (N.D. Cal. Aug. 12, 2010) (citing AmeriPride

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Servs. Inc. v. Valley Indus. Servs., Inc., Nos. CIV. S-00-113-LKK

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JFM, S-04-1494-LKK/JFM, 2007 WL 1946635, at *2 (E.D. Cal. July 2,

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2007)).

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who have resolved their liability in relation to the government.

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42 U.S.C. § 9613(f)(2).

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generally enter contribution and indemnity bar orders in CERCLA

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cases if the settlement is fair, reasonable, and adequate.”

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Coppola v. Smith, No. 1:11-CV-1257 AWI BAM, 2017 WL 4574091, at

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*3 (E.D. Cal. Oct. 13, 2017) (collecting cases).

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The contribution bar in § 9613(f)(2) applies to parties

“[C]ourts review settlements and

California’s approach to evaluating settlements and
implementing contribution bars is strikingly similar.

California

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The UCFA and UCATA are model acts proposed by the
National Conference of Commissioners on Uniform State Laws that
advocate competing methods of accounting for a settling party’s
share when determining liability. AmeriPride Servs., 782 F.3d at
483. Courts in California have adopted the UCFA approach, others
the UCATA approach, and others still simply apply §§ 877 and
877.6 to CERCLA claims. See Coppola, 2017 WL 4574091, at *3
(noting “[t]he methodology used by federal courts in California
to assess [] settlements and contribution bars is not always
uniform”).
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state substantive law on settlements is codified at California

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Code of Civil Procedure Section 877.

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procedural mechanism for implementing § 877, is intended to

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promote the equitable sharing of costs among the parties at fault

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and encourage settlement.

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Ass’n, 38 Cal. 3d 488, 494 (1985).

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tortfeasor or co-obligor from any further claims against the

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settling tortfeasor or co-obligor for equitable comparative

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contribution, or partial comparative indemnity, based on

Section 877.6, the

Tech-Bilt, Inc. v. Woodward-Clyde &
It will “bar any other joint

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comparative negligence or comparative fault.”

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877.6(c).

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Cal. Civ. P. §

Courts are permitted to approve a settlement under §

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877.6 if it was made in good faith.

(Id.)

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settlement was made in good faith, courts consider the following,

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among other practical factors: (1) a rough approximation of the

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plaintiffs’ total recovery and the settlor’s proportionate

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liability; (2) the amount to be paid in settlement; (3) the

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allocation of settlement proceeds among the plaintiffs; (4) a

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recognition that a settlor should pay less in settlement than he

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would if he were found liable after a trial; (5) the financial

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conditions and insurance policy limits of the settling

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defendants; and (6) the existence of collusion, fraud, or

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tortious conduct aimed to injure the interests of non-settling

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defendants.

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determination is left to the trial court’s discretion.

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502.

Tech-Bilt, 38 Cal. 3d at 499.

To access whether a

Ultimately, the
Id. at

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The factors used to evaluate whether a CERCLA

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settlement is fair, reasonable, and adequate parallel those used
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to determine whether a settlement is in good faith under

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California law.

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Management, No. 2:18-cv-900 WBS EFB, 2019 WL 2249629, at *2 (E.D.

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Cal. May 24, 2019) (citing Coppola, 2017 WL 4574091, at *3).

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Consequently, the court will make findings regarding good faith

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under California law as part of its determination of whether the

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settlement of the CERCLA claim is fair, adequate, and reasonable.

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Id. (internal quotations and alterations omitted).

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B.

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City of West Sacramento v. R & L Business

Application as to Plaintiff’s Claims
Tech-Bilt’s first four factors demand that the court

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consider the amount of the settlement in proportion to the

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settling parties’ liability, although the settlement amount need

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only be in the ‘ballpark’.”

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38 Cal. 3d at 499-500.

Here, the Settling Parties agree that the settlement

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and their previous monetary contributions5 reflect the

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proportionate shares of their alleged liability.

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45.)

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the Control Board $24,380.32 for oversight costs, the Lewises

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have agreed to pay $487,917.00 to the Trust while The Davis

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Center and Potter-Taylor collectively will contribute

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$1,252,083.00.

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Parties contend the settlement amount is reasonable because it

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will fully fund the Remediation Plan and reimburse the Control

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Board.

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in the “ballpark” of the Settling Parties’ proportionate share of

(King Decl. ¶

In order to fully fund the Remediation Plan and reimburse

(Settlement Agreement at 3.)

(King Decl. ¶ 42.)

The Settling

Further, the Settlement appears to be

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Each of the Settling Parties previously contributed
between $40,000 and $60,000 to pay for the Site investigation
during mediation. (King Decl. ¶ 44.)
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alleged comparative liability because the Settling Parties’ total

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monetary contribution –- $1,740,000.00 –- exceeds their cumulative

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liability because none of the Remediation Plan or the Control Board

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oversight costs have been allocated to any non-settlors.

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43.)

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Settling Parties have satisfied Tech-Bilt factors one and two.

(Id. ¶

Based on these representations, the court concludes that the

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Similarly, the allocation of the Trust to fund the

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Remediation Plan is appropriate because it is designed to accomplish

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the required remedial cleanup at the Site.

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3.)

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(Settlement Agreement at

Accordingly, the Settling Parties have satisfied Tech-Bilt

factor three.

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Under factor four, the Settling Parties estimate that,

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in light of the complexity of this litigation and the expenses

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incurred over almost two decades of conflict, their monetary

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contributions toward the Settlement are less than what each party

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would have paid had it been found liable at trial.

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This settlement also saves the parties’ further litigation costs

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and the court’s time.

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2249629, at *3 (citing Coppola, 2017 WL 4574091, at *4).

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facts favor approving the settlement under Tech-Bilt’s fourth

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factor.

(Id. ¶ 47.)

See City of West Sacramento, 2019 WL
These

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The fifth and sixth Tech-Bilt factors consider the

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settling parties’ financial ability to meet the terms of the

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settlement and the settling parties’ potential to injure the

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interests of non-settling defendants.

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the Settling Parties engaged in lengthy negotiations and

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mediations before arriving at the settlement’s final terms.

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(King Decl. ¶ 47.)

38 Cal. 3d at 499.

Here,

They each evaluated their available insurance
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policy limits and financial conditions and balanced those

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evaluations against the facts of the case and the strength of the

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claims against each party, and subsequently reached this

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agreement.

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settlement.

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(King Decl. ¶ 50.)

Accordingly, factor five favors

Finally, the court must consider the settlement’s

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potential to injure the interests of non-settling defendants.

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Here, the only non-settling defendants are the Suhs.

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not substantially participated in the litigation since filing

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their cross-claims in 2004.

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Parties’ claims against the Suhs were discharged in 2010 after

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they filed bankruptcy, and the City obtained summary judgment on

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the cross-claims they had asserted against it in February 2018.

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(Id. ¶¶ 7, 8.)

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negotiations were unsuccessful (Id. ¶ 53), and any attempt to

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engage them in settlement could not have resulted in any

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contribution from them because of their discharge in bankruptcy.

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(Id. ¶ 8.)

Accordingly, they do not oppose this Settlement

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Agreement.

The absence of an opposition to the settlement

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agreement “is highly telling and is clearly indicative of

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reasonableness and good faith.”

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The court finds the settlement negotiations involved no

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collusion, fraud, or tortious conduct intended to injure the non-

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settling parties.

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(King Decl. ¶ 6.)

They have

The Settling

Attempts to engage the Suhs in settlement

Coppola, 2017 WL 4574091, at *5.

Overall, the Tech-Bilt factors favor a finding of

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reasonableness and good faith.

Accordingly, the court finds the

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settlement was made in good faith and is fair, reasonable, and

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adequate, and the court will approve the settlement and enter a
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contribution and indemnity bar order.

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IT IS THEREFORE ORDERED that the parties’ joint Motion

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for Good Faith Settlement (Docket No. 551), be, and the same

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hereby is, GRANTED.

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It is further ORDERED that:

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1.

Under California Code of Civil Procedure §§ 877

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and 877.6, and 42 U.S.C. § 9613(f), the settlement

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agreement reached by the settling parties is in

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good faith and is a fair, adequate, and reasonable

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settlement;

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2.

All pending claims and cross-claims against the

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settling parties in the above-entitled actions are

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dismissed with prejudice;

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3.

the Covenant constitutes an administrative

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settlement with the State for purposes of CERCLA §

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9613(f)(2);

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4.

Any and all claims or future claims for contribution

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or indemnity, arising out of the facts alleged in

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the Second Amended Complaint, and as further

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identified and provided for in the settlement,

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regardless of when such claims were asserted or by

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whom, are barred.

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Dated:

October 16, 2019

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